The Future of the Gig Economy Is on the Ballot

The Future of the Gig Economy Is on the Ballot

The Future of the Gig Economy Is on the Ballot

California’s Prop 22 would make the misclassification of Uber and Lyft drivers permanent.


I’m a writer. I’m also a part-time bicycle courier for UberEats, Postmates, and Caviar in New York City: a job that I do on the side, on my own schedule. I am the mythical “independent contractor” Silicon Valley platform capitalists like Uber cite to justify California Prop 22, which, if passed in November, could permanently exclude delivery and rideshare workers from employee status—and therefore deny them the rights and protections they deserve.

Despite what these companies would like you to think, most of their workers are not like me. I’m young. I’m college-educated. I have savings; I have my own health insurance. When the coronavirus hit New York in March, it was an easy decision for me to stop doing deliveries and protect my health, even if it meant less income.

But recent studies across cities like New York, San Francisco, and Seattle show that I’m an outlier: The majority of the “gig workers” who provide the bulk of the labor on these platforms have no other job. They can’t afford to take time off, even during a pandemic. They are predominantly older men, majority Black and brown, often immigrants with no more than high school degrees, and regularly working more than 30 hours a week to support families. They are significantly underinsured. Most cannot afford a $400 emergency expense. These platforms’ entire business model depends on misclassifying laborers with few other options.

It’s important that we all understand the platform capitalists’ playbook. They are taking over industries by using underregulated labor and setting rock-bottom prices. The companies willingly lose billions of dollars a year just to win market share—which in turn lets them force concessions from local governments and further cement their dominance. Their end goal is to become the sole provider of vital services, then raise prices, cut wages, and extract profits. All of this is subsidized by a pipeline of cash from venture capitalists, who understand that these platforms’ long-term success ultimately depends on their ability to control us—the workers. Misclassification is their secret weapon.

Bear in mind that an app like Uber’s core selling point is giving the customer instant gratification (for a ride or for their chicken taco). The company does this by rigorously manipulating “utilization”: the proportion of workers engaged on a request (carrying a passenger, delivering food) over the total workers online at a given moment. To make sure customers experience no delays, companies deliberately onboard far more workers than they need, so that they can keep a significant reserve of us on standby, anxiously checking the app, geared up and ready to work. Because the companies label us “independent contractors,” we are not compensated for this waiting, even though it is essential to the service. Because we can’t set our own prices, our earnings are at the mercy of algorithms designed to waste our time.

Then, misclassification robs us of that money. As “independent contractors,” we must pay for our own expenses, vehicle, fuel, insurance, and repairs. We’re on the hook for both the employee and employer’s portion of Social Security and payroll taxes. We are entitled to no health benefits, no sick leave, no worker’s compensation if we’re injured, and no minimum wage. We have no recourse if we’re fired or laid off (or, in gig economy parlance, “deactivated”), and receive no unemployment insurance afterward. All of this is upside for the platform capitalists. A report from the Labor Center at University of California–Berkeley estimates that Uber and Lyft dodged $413 million in unemployment insurance taxes over five years by misclassifying its drivers in California; analysts at Barclay estimate that misclassification cumulatively saves Uber and Lyft nearly $800 million a year.

After accounting for expenses, taxes, missing benefits, and waiting on the job, our effective hourly rate ends up well below most states’ minimum wage. As a recent study of New York City’s rideshare economics summarized: “The app business model works only if it keeps driver utilization low, which then keeps drivers’ hourly pay low as well.” The only factor that maintains a wage floor at all, researchers concluded, is the fact that workers quit.

But those who can afford to leave, like me, are the lucky ones. The workers who actually keep the platforms afloat are locked in—and the bosses know it. As the New York study found: “The app companies have been able to expand their workforce by drawing principally immigrants without a four-year college degree and who face restricted labor market opportunities; and 60-65 percent of app drivers are full-time, without another job, and about 80 percent acquired a car to earn a living by driving.” Last month, an amicus brief by the ACLU and National Employment Law Project put it more bluntly: “Uber and Lyft do not offer ‘opportunities’ to marginalized workers and communities of color. Their misclassification model deepens the desperation of workers who have been excluded from stable employment, with Black and Latino workers made to bear the brunt.”

As part of their propaganda efforts, the app companies have made a big show of “support” for Black Lives Matter amid this year’s protests. But when these companies encourage drivers to take out car loans they know they can’t afford, they disproportionately harm Black workers, who are more indebted than their white peers. When they refuse to provide wage data to states during the coronavirus pandemic, effectively cutting off their workers from expanded unemployment assistance, they disproportionately harm Black workers, who are more likely to be excluded from unemployment benefits. Thanks to misclassification, workers are also prevented from filing Title VII complaints against the companies for discrimination.

Some governments have attempted policy fixes that would preserve workers’ independent contractor classification while mandating fairer pay—only for the platforms to find workarounds. In 2019 New York City introduced a wage minimum for rideshare drivers that would vary with the platform’s total utilization: If the platform was keeping more workers idle, it would have to pay all workers higher rates. In response, Uber began locking a share of drivers out of the app (so they would not count toward utilization), and giving them limited opportunities to sign on. Then it “rewarded” drivers who drove the most grueling hours with the ability to use the app normally. Drivers, already strapped for cash, were forced to sleep in their cars, waiting for every chance to sign in and work. Seattle has just announced a measure similar to New York’s, and again Lyft and Uber are threatening to cut drivers from the app.

The New York case demonstrates that misclassification was never about giving workers “flexibility.” What’s more, the notion that we could lose our freedom if we were classified as employees is a scare tactic that relies on a basic misunderstanding of labor law: There is nothing that says flexibility can’t be offered to employees. “Employee” is a legal designation: An employee can work as few or as many hours to which an employer agrees, can schedule shifts on the fly, and can have multiple employers, all without sacrificing basic workplace protections.

The inequalities of the “gig economy” cannot be solved without tackling misclassification head on. The only law that has done so thus far is California’s AB5, passed last year, which places a higher burden on companies to prove that their workers are truly independent contractors. In May, California attorney general Xavier Becerra sued Uber and Lyft alleging violations of AB5; if found in breach, the companies could be forced to pay hundreds of millions of dollars in restitution to workers, or even shut down altogether.

That’s why the platforms are going all in on Prop 22, which would not only grant themselves an exemption from AB5 but also require seven-eighths of California’s legislature to make any further changes and prevent local governments from passing stricter laws on the companies—effectively carving their workers’ misclassification into stone. The companies have poured a record-breaking $181 million into a “Yes on Prop 22” campaign that has blanketed California with nonstop ads, paid “volunteers” for testimonials, enlisted a right-wing troll army to harass opponents, and added scare messages into the Uber app itself.

The claim that Prop 22 is “progressive,” pro-worker legislation is based on insultingly misleading figures. Prop 22 will supposedly create a wage floor of 120 percent of the national minimum wage; the UC Berkeley Labor Center estimates that after factoring in waiting time, expenses, and taxes, this wage floor would, in fact, come out to $5.64 an hour. The “Yes on Prop 22” website claims that workers prefer being independent contractors “4 to 1”; what it doesn’t mention is these numbers are from an online survey commissioned by Lyft, which polled around 1,000 Internet users who identified as independent contractors—out of which just 9 percent were actually gig workers. The other 91 percent of respondents included freelancers, self-employed business owners, and entrepreneurs—in other words, not those who fuel these platform capitalists’ bottom line.

The power of these platforms has grown to frightening new levels. Their business has boomed during the pandemic even as their contempt for workers has reached new lows: When the virus first hit, DoorDash was charging couriers as much as $40 to buy hand sanitizer. Recently UberEats purchased Postmates, Doordash bought Caviar. This means workers will have even fewer choices and even less leverage.

But resistance against these companies’ greed and cynicism is gathering strength, and has resulted in powerful tools like AB5. Already lawmakers in New York and New Jersey have hinted at introducing similar bills. What happens in California in a few weeks time will send a message that other states will heed closely. The future of American labor could very well hinge on whether Prop 22 can be defeated.

Thank you for reading The Nation!

We hope you enjoyed the story you just read, just one of the many incisive, deeply reported articles we publish daily. Now more than ever, we need fearless journalism that moves the needle on important issues, uncovers malfeasance and corruption, and uplifts voices and perspectives that often go unheard in mainstream media.

Donate right now and help us hold the powerful accountable, shine a light on issues that would otherwise be swept under the rug, and build a more just and equitable future.

For nearly 160 years, The Nation has stood for truth, justice, and moral clarity. As a reader-supported publication, we are not beholden to the whims of advertisers or a corporate owner. But it does take financial resources to report on stories that may take weeks or months to investigate, thoroughly edit and fact-check articles, and get our stories to readers like you.

Donate today and stand with us for a better future. Thank you for being a supporter of independent journalism.

Thank you for your generosity.

Ad Policy